Johnston v. Nakis

• Court: New York Supreme Court
• Writing for the Court: KENNETH R. FISHER, J.
• Citation: Johnston v. Nakis, 2014 NY Slip Op 24327, 997 N.Y.S.2d 257, 46 Misc.3d 651 (N.Y. Sup. Ct. 2014)
• Decision Date: 28 October 2014
• Docket Number: 2013/10579
• Parties: Lisa J. JOHNSTON, Plaintiff, v. George NAKIS, Defendant.

46 Misc.3d 651

997 N.Y.S.2d 257

2014 N.Y. Slip Op. 24327

Lisa J. JOHNSTON, Plaintiff

v.George NAKIS, Defendant.

2013/10579

Supreme Court, Monroe County, New York.

Oct. 28, 2014.

Fero & Ingersoll LLP Rochester, (Matthew J. Fero, Esq., of counsel), for plaintiff.

Karen Smith Callanan, Esq., Rochester, for defendant.

Opinion

KENNETH R. FISHER, J.

Plaintiff shall have a divorce pursuant to DRL § 170(7). Defendant's counter-claim fails for want of proof.

Custody of the two minor children was settled by execution of an Agreement for joint shared custody dated June 16, 2014, which was made a Temporary Order of the court. That agreement is hereby made an Order of Permanent Custody and Visitation. Exh. # 2.

Under this agreement, a two week rotating schedule was established whereby the father enjoys 4 nights in Week 1 and 3 nights in Week 2, and the mother enjoys 3 nights in Week 1 and 4 nights in Week 2. Inasmuch as the court must look to the overnights in calculating which parent has residence most of the time, Rubin v. Salla, 107 A.D.3d 60, 69–70, 964 N.Y.S.2d 41 (1st Dept. 2013) (“the number of overnights, not the number of waking hours, is the most practical and workable approach”), it is evident that this is a truly 50–50 shared agreement. Accordingly, “the parent with the higher income, who bears the greater share of the child support obligation, in this case the father, should be deemed the noncustodial parent for the purpose of support.” Barr v. Cannata, 57 A.D.3d 813, 814, 870 N.Y.S.2d 120 (2d Dept.2008). See Eberhardt–Davis v. Davis, 71 A.D.3d 1487, 1487–88, 897 N.Y.S.2d 376 (4th Dept.2010) ; Moore v. Shapiro, 30 A.D.3d 1054, 1055, 815 N.Y.S.2d 855 (4th Dept.2006).

The parties have a complicated employment history, a central feature of which is plaintiff's inherited deaf condition for which she receives Social Security disability income on behalf of herself and her children. Exh. # 6. Plaintiff also receives additional income teaching classes at the University of Rochester, RIT, and as an evaluator for the ASL Teacher's Ass'n. Exh. # 8. Plaintiff must limit her supplemental income by virtue of a regulatory $1,070.00 cap. 42 U.S.C. § 423(d) ; 2 C.F.R. § 404.l1574. Plaintiff left her job in 2006, by mutual agreement of the parties, to help defendant's new business (after his prior business, Nakis Autocare, Inc. filed for bankruptcy) via caring for a learning delayed son. The new business, Rookies Neighborhood Sports Bar, was formed with equal $117,000 contributions from defendant, his cousin (Gus Votsis) and a third investor. Defendant financed his portion via an additional loan against the marital residence, then his separate property, in the amount of $80,000, and the sale of farmland defendant previously purchased from his father. The sale was shown to have been made at a $23,000 loss. Despite full payment, defendant never executed an equal partnership agreement nor were any partnership, corporate or LLC agreements drawn up of which concerned defendant.

The other investors forced defendant out of this business in 2008 when the state sales tax authorities began an investigation. Defendant offered no proof of an effort to protect his interest in the business, and instead claimed that, by reason of a dispute with his cousin, he filed an IRS whistleblower application, the details of which were never explained at the trial. The business remains ongoing, however.

Two years later, defendant began a third business with the third investor, called Rookies Sports Bar and Grill.

Although no funds were invested, defendant was elected president of Halftime, Inc., the owner of Rookies II, and he claimed at trial to have signed a partnership agreement. Again, despite due discovery demand, no documentation of this third business was produced at trial except a Halftime corporate record book, which contained no reference to the claimed agreement. The above history of sales tax violations eventually carried forward to this third business, which was sold in 2011 to an insolvent buyer, which declared bankruptcy before making any payments.¹

Given the abundant proof of marital waste and dissipation of assets, the extent of which must be inferred to be greater than that defendant accounted for in his trial testimony (numerous discovery requests aimed at nailing the matter down were not heeded by defendant), CPLR 3126, and the numerous mistakes and omissions on defendant's statement of net worth, admitted on cross examination, the court is not bound to accept defendant's account of his finances.

This and other history of egregious misconduct (detailed below) warrants imputation of income to defendant above his “reported” income (defendant's SNW failed to declare any income). According to defendant's paystub, defendant makes $13.50/hr at Autozone and $20.25/hr for overtime worked. Defendant admitted at trial that, despite his varying deposition testimony, he works 8.5 hours overtime a week. Exh. # 1A, pp. 9–10; Exh. K (Autozone Earning Record). Defendant also has significant undisclosed sources of income, as evidenced by over $10,000 in deposits into his account in the last 9 months of the statement period evidenced in Exh. # 5. Defendant's failure to declare this source of his additional income warrants imputing at least $10,000/yearly income in excess of his Autozone income.

Annualizing defendant's bi-weekly Autozone income of $1,000 (regular) and $344.25 (overtime) for a total of $1,424.25, results in an annual figure of $37,030.50, less FICA of $2,428.92, for a total of $34,601.58, to which $10,000 must be added, yielding a CSSA income figure of $44,601.58, or $44,602 rounded.

Plaintiff's income consists of $1,767.00/monthly in Social Security disability payments together with limited outside income from the U of R and RIT, up to $1,070.00/yearly according to plaintiff, for a total yearly figure of $22,273.00/yearly (calculated using $1,069 as the outside income figure.) The record shows, however, that plaintiff is capable of working full time, as her past employment history shows. She testified that her old position at the U of R has been filled and that her efforts with two other unspecified employers have failed. Accordingly, this testimony, coupled with her higher education degree, warrants a finding that plaintiff is capable of earning income in excess of her SSD benefits. Nonetheless, her testimony concerning her job search efforts and the very nature of her disability supports a determination that no income should be imputed by reason thereof.

One other possible method of imputing income is if her expenses as reported on her SNW exceed that she receives in SSD benefits. Bruce L. v. Patricia C., 62 A.D.3d 566, 567, 880 N.Y.S.2d 253 (1st Dept.2009). Those expenses, as reported in Exh. # 9, total $9,914. Accordingly, plaintiff's income figure for CSSA purposes is $22,273.

The combined parental income is $66,875. Father's proportionate share is 67% rounded, and Mother's is 33% rounded. Twenty-five percent of $66,875 is $16,719 rounded. Father's share of that figure is $11,202/yearly (rounded), $933.50/monthly, $431/bi-weekly (rounded), or $215/weekly (rounded). Inasmuch as defendant did not, either in discovery despite due demand, or at trial, produce information or documentation showing the differential between his cost for a family vs. an individual employer provided healthcare plan, he is ordered to pay 100% of those costs of covering the children. Otherwise he is ordered to pay 67% of the costs of the statutory add-ons, which shall be detailed in the findings of fact to be submitted to the court.

Marital Residence

The stipulated value of the marital residence is $168,000. Exhs. # 3–4, against which there appears a HELOC balance of $112,027, Exh. # 5, yielding an ostensible equity of $55,973. Both parties, who continue to live together, seek a buyout of the marital residence. Defendant, however, provided no evidence of his capability of buying plaintiff's equitable interest (other than as set forth below), and other factors (also detailed below) preclude such an award to him. For the following reasons, the marital residence is distributed to plaintiff free of any obligation on her part to buy out what, under ordinary circumstances, might be defendant's equitable interest.

The chronology of the failed business history detailed on pp. 2–3, above, must be recalled. In particular, it must be remembered that, in 2006 in connection with the formation of Rookies I, defendant placed an addition lien on what then was his separate property, the marital residence.

Plaintiff established that the marital residence became marital property in September 2010 where, as part of a series of transactions entered into with Citizen's Bank between that September and March 30, 2011 designed to consolidate defendant's business debt with the marital debt allocable to the residence itself, defendant conveyed the residence to himself and plaintiff. Exhs. # 21, # 22. The March 30th HELOC, in the maximum amount of $117,000, provided moneys to repay the then existing $42,335 mortgage on the marital residence and the then existing $54,147 business debt, which had earlier been converted into a HELOC secured by the marital residence the previous September. On March 30, 2011, the balance on the March 30th HELOC was $96,502. Exh. L. Plaintiff contends that these transactions result in a net credit in favor of her under the rationale of Nidositko v. Nidositko, 92 A.D.3d 653, 656, 938 N.Y.S.2d 569 (2d Dept.2012). This follows because, although one of the mortgages satisfied can be traced back to the purchase of the residence by defendant prior to the marriage, defendant provided no evidence concerning what he paid by way of a down payment for the property, nor did he provide a closing statement or other mortgage documents evidencing what that credit in his favor might have been. Accordingly, he failed to meet his burden to show what credit he might be entitled to.

Separately,...